The Dow Jones Indexes’ mid-year economic outlook broke down into a discussion over the hedge exemption afforded swap dealers and index traders who hedge their cash positions in the futures markets.

Despite a Commodity Futures Trading Commission (CFTC) study released last September that disputed consistent and relentless arguments that speculators caused last year’s spike in crude oil, several members of Congress have persisted in pinning the blame on the large index funds that track various commodity indexes. There are several efforts to take away the hedge exemption that allows index traders hedging their cash exposure to commodity markets with futures to trade beyond speculation limits.

Those blaming speculators for price volatility would like to limit hedge exemptions to the traditional commercial participants who actually make or take delivery of a commodity.

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